Fortis case: SC allows financial institutions to sell pledged shares

The Supreme Court today said the financial institutions with whom shares of Fortis Healthcare Limited were pledged, can be sold or transferred by them.

The apex court clarified an earlier order while hearing an appeal of Japanese firm Daiichi Sankyo Company Limited, which is seeking to enforce the Rs 35 billion arbitral award against Malvinder Singh and Shivinder Singh, the original promoters of pharma company Ranbaxy and Fortis.

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A bench of Justices Ranjan Gogoi and R Banumathi clarified its earlier status quo order and said that the shares of Fortis Healthcare Limited encumbered by Fortis Healthcare Holding Pvt. Ltd with the financial institutions (FIs) can be sold, traded or transferred.

"We clarify our interim orders dated August 11, 2017 and August 31, 2017 to mean that the status quo granted shall not apply to shares of Fortis Healthcare Limited held by Fortis Healthcare Holding Pvt Ltd, as may have been encumbered on or before the interim orders of this Court dated August 11, 2017 and August 31, 2017," the bench said.

Earlier, the apex court had restrained FIs including Axis Bank and Yes Bank from selling the shares pledged by former Ranbaxy promoters (Malvinder Singh and Shivinder Singh) and ordered to maintain status quo with regard to encumbered and unencumbered shares both.

Malvinder and Shivender had resigned from the posts of executive chairman and non-executive vice-chairman of Fortis healthcare respectively on February 8.

The Japanese firm Daiichi had challenged a Delhi High Court order of June 21, last year allowing the Singh brothers to sell a stake in Fortis Healthcare on the condition that the disclosed value of their unencumbered assets would remain unaffected.

On January 31, the high court had upheld the April 2016 award of a Singapore arbitration tribunal directing the Singh brothers to pay about Rs 2,563 crore as damages with the annual interest of 4.44 per cent from November 7, 2008 to the date of the award.